2018 (1) TMI 502 - HC - Money Laundering

Application of provisions of Prevention of Money Laundering Act, 2002 - pray for quashing and setting aside of Enforcement Case Information Report with different numbers registered by respondent no.2 Directorate of Enforcement against them, along with enquiry/investigation therein - Held that - It is apparent that this court cannot make any observation and record any finding which will interfere with proceedings pending before the Appellate Tribunal. It is also apparent that this court cannot and could not have passed an order granting any interim relief to the petitioners in present matters. Though petitioners have not relied upon the judgment delivered by the Division Bench of Karnataka High Court, the respondents have pointed out, that the view reached there in favour of petitioners is stayed in Special Leave Petition by the Hon ble Supreme Court, and the said Division Bench judgment cannot be cited as a precedent. We have already made some comments upon petitioners contentions based upon Article 20, and we need not therefore, go into this issue at all. Thus we uphold the preliminary objection raised by learned A.S.G.I. We declare that Criminal Writ Petitions filed before this Court are not maintainable. We also clarify that the observations made by us supra, are in the light of arguments advanced and only to the extent necessary to evaluate the same. The same will not have any bearing or influence on the pending appeal before the Appellate Authority under 2002 Act, or pending prosecutions before the Special Court at New Delhi. Accordingly Writ Petitions are dismissed

Summary

Issues Involved:
1. Application of the Prevention of Money Laundering Act, 2002 (PMLA) to the petitioners.
2. Jurisdiction of the High Court to entertain the petitions in light of the Supreme Court's directions.
3. Validity of provisional attachment orders under Section 8(5) of the PMLA.
4. Retrospective application of the PMLA.
5. Distinction between the proceedings under IPC and PMLA.
6. Interim relief and maintainability of the writ petitions.

Detailed Analysis:

1. Application of the Prevention of Money Laundering Act, 2002 (PMLA) to the petitioners:
The petitioners questioned the application of PMLA provisions to them and sought quashing of the Enforcement Case Information Reports (ECIRs) and investigations. They contended that the alleged offenses were completed before the inclusion of Sections 120-B and 420 of the Indian Penal Code (IPC) in the PMLA Schedule, making the retrospective application of the Act unconstitutional.

2. Jurisdiction of the High Court to entertain the petitions in light of the Supreme Court's directions:
The respondents raised a preliminary objection based on the Supreme Court's judgment in Girish Kumar Suneja v. CBI, arguing that the High Court lacked jurisdiction as the Supreme Court had directed that all matters related to coal block allocation and related offenses be handled by a Special Court in Delhi. The High Court upheld this objection, stating that it could not interfere with proceedings or grant interim relief due to the Supreme Court's directions.

3. Validity of provisional attachment orders under Section 8(5) of the PMLA:
The petitioners challenged the provisional attachment orders, arguing that no offense under the PMLA had been registered against them, and thus the attachment was without jurisdiction. The Court noted that Section 5(1) of the PMLA allows provisional attachment if there is reason to believe that any person is in possession of proceeds of crime. The adequacy of the material or the process of forming subjective satisfaction by the authority was not in question. The Court concluded that the issue should first be decided by the authorities under the PMLA as per the Supreme Court's directions.

4. Retrospective application of the PMLA:
The petitioners argued that the alleged offenses were completed before the inclusion of Sections 120-B and 420 of IPC in the PMLA Schedule, making the retrospective application of the Act unconstitutional. The Court found this contention to be misconceived, stating that the wrongful act envisaged under Section 3 of the PMLA is perceived as an offense since the inception of the Act. The Court also noted that the investigation might reveal continued involvement of the petitioners in money laundering, making the retrospective application argument irrelevant.

5. Distinction between the proceedings under IPC and PMLA:
The Court highlighted that proceedings under the IPC and PMLA are independent of each other. The PMLA deals with the proceeds of crime, which can be attached irrespective of the conviction for the scheduled offense. The Court emphasized that the PMLA aims to cover a wide range of activities related to money laundering and should be interpreted liberally to advance public revenue interests.

6. Interim relief and maintainability of the writ petitions:
The Court noted that the interim orders passed by it interfered with the investigation and prosecution as directed by the Supreme Court. It upheld the preliminary objection regarding the maintainability of the writ petitions and dismissed them, vacating the interim orders. The Court also rejected the petitioners' request for continuation of interim orders to approach the Supreme Court, citing the expiration of the 180-day period and the Supreme Court's directions.

Conclusion:
The High Court dismissed the writ petitions, upholding the preliminary objection regarding jurisdiction and maintainability. It emphasized that the issues raised by the petitioners should be addressed by the authorities under the PMLA and the Special Court in Delhi, as per the Supreme Court's directions. The Court also clarified that its observations would not influence the pending appeal before the Appellate Authority or the prosecutions before the Special Court.